National Renewable Electricity Standard: Why Raise Electricity Prices?
Earlier this month, Representatives Jared Polis (D Colorado), Ben Ray Luján (D New Mexico), and Ann Kuster (D New Hampshire) introduced the National Renewable Electricity Act of 2013 (RES Act) into the US House of Representatives.
The act mandates that all US retail electrical suppliers buy an increasing amount of electricity from renewable energy sources, or pay fines for the shortfall. If the law is passed, it will raise electricity prices for Americans for questionable environmental gains.
The act calls for solar, wind, biomass, geothermal, and other renewables to provide 6 percent of US electricity in 2014, rising to 25 percent by the year 2025. Representative Kuster says, “This common-sense bill will help create good middle class jobs, cut pollution and reduce our dependence on foreign oil—all while saving consumers money on their utilities.”
Unfortunately, Ms. Kuster’s statement is not supported by actual industry experience and economic data.
Forcing consumers to buy a product that is more expensive, like renewable energy, does not realize consumer savings. A prime example is the recently completed California Valley Solar Ranch in San Luis Obispo County that was constructed under the 33 percent renewables mandate of California’s Renewable Portfolio Standards (RPS) law. The solar ranch covers a 1,500 acres, more than 100 times the area of a typical natural gas-fired power plant, but produces an average output of only about 55 megawatts, less than one-tenth the output of a typical gas-fired plant. The cost for that renewable energy production is an exorbitant $1.6 billion.
Consumers will pay twice for the California Valley Solar Ranch. Electricity from the ranch will be priced at 15 to 18 cents per kilowatt-hour, four times the price of current California wholesale electricity and over 50 percent more than projected prices during the next 25-years.
Consumers also paid for a tax subsidy package totaling $1.4 billion, including a 30 percent federal investment tax credit worth $462 million, a $1.2 billion US Department of Energy loan guarantee worth $205 million, and other tax benefits.
Representative Kuster’s comments about reducing “our dependence on foreign oil” are nonsense. Today only 0.7 percent of US electricity comes from petroleum. Claiming that a national renewable electricity standard will reduce foreign oil imports is about accurate as claiming that it will promote world peace.
Politicians repeatedly state that subsidies and mandates for renewable energy will produce “green jobs.” But the Beacon Hill Institute developed more than ten studies on the impacts of state RPS laws, including Colorado and New Mexico, the home states of Representatives Polis and Luján. In all cases, the implementation of RPS laws was found to increase electricity prices, reduce real disposable income, reduce investment, and cause a net reduction in jobs.
Today, 29 states follow renewable portfolio standards laws and another 8 states pursue renewables goals for electricity. The sponsors of the RES Act want to force mandates on the remaining 13 states, the only states with a rational energy policy.
Note that in 2012, citizens in states without RPS mandates paid 10.7 cents per kw-hr for residential electricity, about 19 percent less than the 12.7 cents per kw-hr paid by citizens in states with RPS laws or goals. Higher electricity prices disproportionately impact the poor, as a larger part of their family budget.
Neither is a reduction in pollution a good reason for a national renewable electricity standard. According to Environmental Protection Agency data, all real air pollutants, including lead, ozone, nitrous oxides, sulfur oxides, and carbon particulates have been falling for more than 40 years and continue to decline.
US air pollution levels have fallen an aggregate 72 percent since 1970. At the same time, US electricity production from coal is up 115 percent and from natural gas is up 230 percent.
The unmentioned reason for the RES Act is to reduce emissions of carbon dioxide, the greenhouse gas blamed for man-made global warming. But carbon dioxide, a harmless, invisible gas that trees use for photosynthesis, has been wrongly labeled a pollutant.
By forcing the construction of expensive wind and solar plants, proponents of the theory of dangerous climate change believe that they can save polar bears, reduce the strength of storms, curb droughts and floods, and probably promote world peace.
But RPS laws don’t even reduce emissions of carbon dioxide. Installation of wind systems creates stop-and-go electrical utilities. Output from wind turbines is erratic, forcing back-up coal and natural gas plants to inefficiently ramp power up and down to maintain continuity of energy supply.
Rather than enacting a national renewable electricity law, we should instead roll back our costly state RPS laws. Suppose we return to energy policy based on economics and common-sense, rather than global warming ideology?
[Originally published in The Washington Times]